Bulwark Takes - The U.S. & Canada Trade War Remains Utterly Senseless

Episode Date: March 11, 2025

Justin Ling joins Andrew Egger to talk the escalating trade war between the US and Canada as negotiations and retaliations heat up, including threats to double tariffs and surcharge electricity exports. Follow Justin Ling's Substack

Hi, welcome to The Bulwark. I'm Andrew Egger, author of our Morning Shots newsletter. It really seems like the wheels are kind of starting to come off this whole Trump trade war with Canada thing. Things are starting to happen very quickly. The escalations are coming thick and fast. We've been covering all that a lot as far as how that all looks on the U.S. side of the border. But I'm joined today by someone who's going to fill in some of the gaps up north. Justin Ling is a Canadian journalist. He's a freelancer. He's a fellow sub-stacker. So we like that about him. And he's been covering all things Canada for quite some time.

Justin, thanks for being willing to come on and talk to me for a little bit. Hello. Thanks for having me. So this very strange dynamic that we're covering now where things have gotten very sour very quickly between the U.S. and Canada. I don't think a lot of Americans even really understand, recognize, appreciate just how much anti-U.S. sentiment has kind of curdled in Canada. Where are things right now as far as this, the kind of latest in this unilateral and now bilateral trade war that Donald Trump has launched against Canada? Yeah, I mean, we're at the point now where I feel like if a Canadian politician unilateral and now bilateral trade war that Donald Trump has launched against Canada.

Yeah, I mean, we're at the point now where I feel like if a Canadian politician seriously pitched making America the 11th province, it'd probably get some buy in. The amount of kind of unity of purpose and kind of like, you know, squishy patriotic togetherness in Canada is pretty undeniable at this point. I mean, people are literally booing the U.S. anthem at hockey games. They're cheering watching bourbon comes off the shelves at liquor stores. I was at a hotel last night in Ottawa and someone tried to order a bottle of California Pinot Noir and got told pretty bluntly, we don't serve that here anymore. And he seemed somewhat bewildered.

Like, quite genuinely, it feels like basically everyone in the country is on the same page. You know, there's obviously variations on a theme about how you want to get there. But I think there is just a total willingness to even take a little pain, make a little sacrifice in the name of winning what is now essentially a trade war with what was our closest ally and trading partner. Yeah, I mean, that has been the most amazing thing to me in all of this is that I really do think on the U.S. side, there's this, I don't even know what you'd call it. I mean, it's this sort of bewildering attitude toward Canada that's kind of always existed in this, in sort of a small scale, where it's like, oh, you know, the friendly people up there who are kind of like our cheerful, somewhat lesser partners in this relationship. And so when Donald Trump started kind of pushing Canada around a little bit

or trying to push Canada around a little bit, the reaction was kind of just like, oh, you know, there goes that silly president of ours, you know, beating up somebody again. Like, look, look, I mean, he always does this, that guy. But I mean, and I really do think that Americans have not really contemplated at all the degree to which Canada not only wants to punch back, but is equipped to do so economically. Yeah, listen, though, because I think I hear you. And I think you're right to a large degree. But you also have to recognize that Donald Trump has hit on something which is very real, which is that there is a ton of people in America who blame Canada for the factory closing down the street, right. And this has been a long standing thing. And, you know, I've been obsessed with Peter Navarro, Trump's manufacturing and trade advisor, because Peter Navarro was the guy

who drove the bus on aluminum and steel tariffs on Canada in the first administration. He is a guy who stood by the president became one of his most loyal and faithful advisors. He went to jail for the president. He has been writing for years now that tariffs on Canada are the path through which you revitalize the Rust Belt. You bring manufacturing back to Ohio and Indiana and everywhere else. He argues that the only way to make America manufacture again and to make it resilient against China is through basically tearing up or fundamentally re-altering trade agreements with Canada and elsewhere. And he has made that case very explicitly. Before he went on to deny the 2020 election, he told Donald Trump, the only reason you lost is because you waived the tariffs on Canada after you signed the USMCA deal. And the reality is he's kind of right in the sense that people believe that. Now, it's not true, right? Like it's just factually not true. that people believe that. Now, it's not true, right? Like it's just factually not true.

Canada's factories have shut down exactly at the same pace, moving to Mexico or China or wherever. You know, this, we can have a whole sidebar on the effects of globalization. But nevertheless, I mean, people believe it's true. So even if there's a ton of people in America sort of bewildered about why this is happening, I think there's also a ton of people cheering it on because they believe the lie that this will deliver jobs back to their communities. When in fact, Canada's position here is verifiably true, which is that the only reason we've managed to keep any good manufacturing jobs in North America, the fact that we've been able to make goods that we want to buy and sell here and export abroad is because NAFTA and the USMCA built trade relationships, built supply chains that made this work economical, even in a place of high moving so quickly just over the last few weeks and months. Obviously, it's seen a huge amount of political upheaval in Canada, huge reversal of fortunes in terms of the Justin Trudeau's Liberal Party that had been kind of counted out completely, kind of stick a fork in them. They're done in this upcoming election, humongous resurgence. Obviously, Trudeau himself is stepping aside now. So it's a moment of like real change and flux in Canada right now. Can you just talk to me a little bit about what's been going on there this week with the new prime minister to be?

Yeah, I mean, listen, everything that was once black is white, you know, everything that was down is up. Justin Trudeau's Liberal party had basically zero chance of re-election uh up until like last month and and then the curve just basically shoots right up the liberal party is completely back from the dead uh they've just chosen i was actually just back from ottawa today on sunday they chose a former bank of canada former bank of england governor mark carney as their new leader And he is proving to be remarkably popular amongst Canadians. And he is absolutely running on this very explicit attempt to sort of put your elbows up. He actually used that phrase when it comes to negotiating with Trump. I mean,

he is talking about not just keeping in place the retaliatory tariffs we've already installed. He's talking about adding more. He's talking about a long-term permanent reorganization away from the United States as Canada's number one trading partner. He's talking about revitalizing or expanding out Canada's energy infrastructure. For too long, we've allowed basically a reduction in our oil and gas production because America has been producing way more. And we've kind of sat back and said, you have better infrastructure, you can sell to the world and we'll take a back seat. That's over. So it has been a pretty huge swing over just the span of like 30 days that this guy has now become sort of the captain of Canada in a big way. But it's also kind of helped the fortunes of a bunch of other politicians across the country.

Doug Ford, the premier of Ontario, who just ran for reelection and won in a huge landslide, largely on the back of saying that he's going to stick up for Trump, stick up to Trump, you know, it shows, I think, that Canadians are just desperate for whoever can kind of offer the most robust and, you know, confident reply to the U.S. president. And it's wild, regardless of political ideology, left, center, right, across the country, basically every politician is promising to go hard. And those that are seen as weak are getting absolutely shellacked. Yeah, yeah. Let's talk a little more about Ontario, because at least my kind of idiot Americans understanding right now is that that is one of the main kind of like real cudgels that Canada is poised to sort of wield against the US is these province level export controls, specifically on electricity, which a lot of the northern U.S. is just hooked up to a Canadian-based energy grid. Can you just

talk a little bit about how that has gotten caught up in all this? Yeah, so it's really interesting, and we don't really know where this goes. So up until just the last few years, Canada was a massive net exporter of energy to the US. Hydroelectric dams in Ontario, and especially Quebec, were feeding power through transmission lines into Maine, New York City, further afield. And then you have oil and gas from Alberta and Saskatchewan moving down south into refineries in the Midwest and the Western states. This has been kind of instrumental in creating this kind of shared energy infrastructure, the shared energy grid in North America.

We've allowed it to be free flowing. This is tariff free electricity that is basically moving back and forth with really no surcharge or tax added on top. This was by design. We wanted to create this really efficient, really effective energy infrastructure that is less concerned about what country is producing and consuming and more concerned about where are the customers who can get the best price. So obviously, things are moving really quickly, even as we're talking right now. Just minutes ago, Doug Ford, the Premier of Ontario, came out with a statement, basically temporary cessation, it looks like, in hostilities.

And again, he was the one who had initially had the sharpest response to some of this in terms of wanting to put export tax on energy coming from Ontario into the U.S. What do we know about what this is shaping up to look like? Obviously, it's all very fresh, but what can we learn from this? Yeah. So it's important to note that this is kind of one facet. Ontario had added this extra 25% surcharge on electricity above and beyond the federal tariffs on a whole bunch of other goods. So the tariffs stay in place. The electricity surcharge, which Trump had promised to respond with, 50% tariff on electricity, that's been paused. And it's been paused because Ford says he got a meeting with Howard Lutnick later, I think it's like this week, if not next week, to talk about a renewed USMCA agreement. Now, this has been kind of the thing that Canadians have been throwing out as an option for Trump to avert this whole trade war.

If Trump wants a win, I guess, that lets him claim that he's going to bring jobs back and relocate and onshore manufacturing to America, renewing USMCA, lets him say that, it will do that because he's already tried to do that by negotiating USMCA in the first place. But maybe he could get a couple more things that say that, you know, some more auto manufacturing jobs have to be in America, although he'll have to make concessions to get there. Hard to say. But at the very least, this is the invitation yet again, because it's been made before. This is the invitation to sit down and start talking about what a renewed trade agreement looks like. I'm skeptical. I mean, Trump has clearly said he doesn't want to do that. Trump has clearly said that he won't be happy until the trade surplus turns into a trade deficit with Canada. And there's really no way to do that. Like short of shutting down Canada's oil industry, short of Canada no longer moving oil through American

refineries, short of us no longer selling softwood lumber, which America needs, or moving electricity into the US or having a shared supply chain for auto manufacturing, short of us doing all those things, which we don't want to do because it doesn't make any sense. It's not going to work. So so I don't know, I think Ford may have given them another door to walk through, but I still think they're going to slam it shut. Yeah, yeah. I mean, this has always been one of the things with with Trump, I always have this this phrase from the there's this Republican strategist, Liam Donovan, who talks about how one of Trump's superpowers is that he can declare victory at any point he can, he can pursue the fight as long as he wants to pursue it. And then if he decides that juice isn't worth the squeeze anymore, he can just be like, good news, everybody. We won. Mission accomplished.

A lot of his people will go along with that. This is one of those weird situations where like, I feel like you and I would agree that'd probably be fine. You know, if he wants to take a fig leaf, a fig leaf, you know, re re renegotiation of NAFTA renegotiation of the USMCA and declare that, you know, what was previously the best trade deal in the history of trade deals is now, you know, the new undisputed champ of the block. Like, that'd be fine. You know, quit quit monkeying with all this all this stuff. And it, you know, like you say, it would not actually accomplish any of the like long term stuff that his protectionist vizier, Peter Navarro, and even he himself in terms of the trade deficit want or say they want, but would at least, you know, make the bleeding stop here without him having to like publicly back down. Right. So so maybe that ends up being the best case scenario, something along those lines. Or maybe, you know, we this ends up being another situation of of, you know, Howard Lutnick extends an olive branch that that

he does not actually have really, really the backing of the throne in in in following through on and maybe everything blows up again in a couple of days, as we've seen happen so many times already in all of this. And just really briefly, I mean, you know, this is the tension that has been inside the administration clearly since they've got back into office in January, right? I mean, the Wall Street Journal had a really good piece a couple weeks ago, about a bunch of business Republicans trying furiously to finally get Lutnick and Scott Bassett and the rest of them confirmed because they were terrified that Peter Navarro was running the show on everything. And so those guys are now in the job. But I don't know, like, nothing, nothing screams to me that Trump is interested in going

back to the sort of regular days of the first administration. And you know, you look at someone like Steve Bannon, who's very tight with Peter Navarro, and they're already screaming from the rooftops about, you know, the swamp taking over the administration again. So I don't know. And again, Navarro's whole thing was that he even after USMCA was signed, he wanted the tariffs to stay in place. He wants free trade with tariffs. He is a complete economic quack. And so long as I think he is in the administration, this is going to keep kind of rearing its head. I guess one other possible outcome, the more pessimistic outcome, is that we just enter this doom spiral where the gears are grinding in the president's head. He cannot get what he wants.

And so he just sends the entire economy spiraling down into the toilet over all of this. Let's just talk about that for a minute, too, because it really does seem kind of like unstoppable force meets immovable object in some respects right now, where Donald Trump's whole thing is that he basically knows no other move than to counterpunch, right? And different countries have kind of tried to find different ways to more massage his ego and let him have a win here and there, rather than really punching back. I mean, even Canada, that was kind of the first term strategy, right, for renegotiating NAFTA and into the USMCA. I mean, what do you think we should expect to see in terms of this?

On the one hand, the American people are not really raring for this fight with Canada. They just kind of think maybe this is going to improve the U.S. economy in some respect because Donald Trump says so. But Donald Trump does, I mean, actively now seem to want this fight just as much as Canadians do. Yeah. I mean, let's really quickly go back through what just happened over the last like month and a half, because I think if you if you blinked, you kind of missed it. Right. I mean, Donald Trump came in with this entire, you know, cockamamie national emergency scheme saying that Canada was exporting fentanyl and letting terrorists through the it, right? I mean, Donald Trump came in with this entire, you know, cockamamie national emergency scheme saying that Canada was exporting fentanyl and letting terrorists through the border, things that we know are demonstrably untrue. Of course, that doesn't matter. It doesn't matter

what's true or not anymore. So the reality is that Canada decided to play along with the fantasy and say, okay, fine. There is a little more we can do in terms of stopping fentanyl precursors coming into Canada, although we've already really done that. There's a little more we can do in terms of stopping fentanyl precursors coming into Canada, although we've already really done that. There's a little more we could do in terms of surveilling the border, although we were really already doing that. There really was marginal gains to be made here, right? There's diminishing returns at a certain point, but fine, we'll go spend tens of billions of dollars doing this to make you happy. Oh, great. A huge surprise.

It didn't matter. Trump wanted to do the tariffs because Trump wanted to do the tariffs. This was always a pretext. And you can look at what Peter Navarro has said consistently over the last four years and know that it was always the plan. Right. OK, so we tried to play along. It didn't get us anywhere. We wasted a bunch of money, probably. OK, so Trump puts in the tariffs. He pulls them off. He puts them on, he pulls them off. Canada's position at this point is we are going to respond with tariffs unless you unequivocally stop this ridiculous trade war. And we're going to keep escalating them. And rather than across the board tariffs like America is doing on us, we're going to make them targeted. We are actually specifically targeting industries that rely on exports to Canada. We're targeting in some cases, industries and businesses that are predominantly in red states where Republicans can make the most noise and convince the president to stop. And it's clearly already having some effect.

But where we're at right now is the president basically saying that the tariffs that were put in place to respond to his tariffs were the reason for his tariffs in the first place. It is completely illogical, right? So prior to this trade war, before Trump came into office, something like 99% of American exports into Canada did not face a tariff. The most significant tariffs Canada puts on the US, Donald Trump is right, is on dairy and eggs and cheese and whatnot. And that's largely because we have a protectionist system for dairy and eggs. The U.S. has subsidies, right? Like these are just two different ways of doing non-tariff trade barriers. They're different.

And maybe we deserve some criticism for that. Fine. Donald Trump had a chance to get rid of that when he did the USMCA deal. He took concessions elsewhere instead. Okay? So like he has some blame to shoulder because these tariffs still are in place. So now we're here. He's tariffing all the steel and aluminum, you know, multi-billion dollar industry because he wants us to remove tariffs on a couple million dollars worth of cheese and dairy exports.

This doesn't make any sense. It is all completely hysterical. The only response Canada can reasonably do here is to create pain in consequence for economic warfare. We have no other option here. Canadians are ready to go basically as big as it gets to make sure that America never does this again. And Donald Trump's position seems to be that he'll keep escalating, which, by the way, will ruin the very thing that he wants to come out of these tariffs, which is general revenue that he can use to cut taxes. The higher you put up tariffs, the less trade happens, and therefore the less tariffs you collect. So this is just doomed to

fail on every single level. It is going to cost billions, if not trillions in economic activity, it's going to leave shortages on the shelves, because also, by the way, a ton of US toilet paper comes from pulp made in Canada. So look forward to having toilet paper shortages finally after years of promises. So I don't know where this goes, but I do know that Canadians are rallying behind our response much more than Americans are rallying behind Trump's completely nonsensical trade war to begin with. for Trump, he's already 15 points lower than he was at his inauguration. I mean, like his economic pitch hit a kind of a two part economic pitch going into the election. One of one part of it was a lot of tariffs on everybody. It's not like he hit the ball on that. He unequivocally said that a lot. He also just said, you know, more prosperity, lower prices, better wages, you know, riches, riches, riches, and never really squared the circle between those two things.

I mean, this is – it really is kind of – I mean, I already said kind of unstoppable force meets immovable object, right? Because at any point, Donald Trump could stand down, make the whole thing kind of go up in a puff of smoke, but that would require him to actually be perceived as backing off from this fight that he picked, which has not historically been shown to be in his constitution to do. So I'm with you. I have no idea where this goes. I guess we will we'll just have to keep monitoring. We'll have to keep having you on to talk it through as it as it goes forward. Is there anything else you want to you want to talk about about any of this before I let you go? Yeah, I mean, I think just finally that it would be nice to see everybody else figure out a unity of purpose like Canada has over the last couple of weeks. Right. I mean, you know, I've seen a lot of, I think, understandable and pretty accurate complaining about the uselessness with which the Democrats have responded to everything.

And, you know, I'm not going to go so far as to say like Canada is the new resistance, because the thought of someone saying that out loud makes you want to slap them in the face. But, you know, quite genuinely, here is, you know, 35 million people who have basically collectively, like, you know, with some exceptions, said, this is ridiculous. The president is making the world a less rich, less prosperous, less safe place. And we are going to, you know, buckle up, tighten our belts and do something about it. And frankly, I think there's probably some lessons there for everybody else. Justin Lang, thanks for coming on. Where can people find you? Where can they read your stuff?

I'm on Blue Sky. If you want to go follow me over there, I'm on my sub stack is called Bug-Eyed and Shameless, all about information warfare. And I'm going to be launching kind of a Canadian campaign specific section in the coming week just to cover the campaign that we're about to go into in the coming days or weeks. We're not really sure. And that campaign is going to be all about Trump. So look forward to that. Well, thanks so much for coming on to chew through some of this stuff with us. And thank you also to everybody out there in TV land, all you viewers and listeners and whatever it is that you do to this content that we feed you.

Thanks for tuning in as well. We'll see you guys next time.